MODULE TWO

WHOLESALE AND RETAIL SELLING

Wholesale and retail selling have similarities and differences. Both are selling something.
However, it is important to note that most wholesalers and retailers are not selling products
they produce. They buy the products from other companies (manufacturers and other
distributors) and then sell them to their customers. In this module, you will learn about
wholesaling and retailing.

LET’S DEFINE SELLING

• The act of persuading or helping a customer to buy a product or service in

exchange for value (usually money). The purpose of selling is to generate revenue,
satisfy customer needs (by making the products they need accessible) and build
relationships and brand loyalty.

WHOLESALING

• Wholesaling includes all the activities involved in selling goods and services to those
buying for resale or business use. Wholesalers typically buy from producers (also
known as manufacturers) and sell to retailers, industrial consumers, or other
wholesalers.
• They operate behind the scenes in the distribution channel, helping move products
from manufacturers to the market efficiently.
• A wholesaler might buy 10,000 units of a skincare product from a manufacturer and
sell them in smaller batches to various retail stores.

TYPES OF WHOLESALERS

1. Merchant Wholesalers
a. These are independently owned businesses. They buy goods in bulk and resell
them to other businesses, mostly through retailers.
b. Subtypes of Merchant Retailers
i. Full-Service Wholesalers – These are merchant wholesales who offer
a complete range of services. This includes inventory, delivery, credit
and marketing support for their customers.
ii. Limited-Service Wholesalers – They provide fewer services to their
customers
1. Cash and carry wholesalers – they sell to small businesses
that accept cash and transport goods to their customers.
2. Truck wholesalers - they deliver to customers using trucks
3. Drop shippers – they take orders directly to customers and
arrange delivery without handling the goods (I recommend you
research about this as many entrepreneurs also entered here).
4. Rack Jobbers – They mostly maintain inventory and display
racks in retail stores.
2. Agents and Brokers
a. This type of wholesaler is similar to drop shippers but very different because
they do not take ownership of the goods. They mostly just facilitate sales
between buyers and sellers for a commission. Think of them as your agents
who manage and accept the projects that you are performing.
b. Types of Agents and Brokers
i. Manufacturers Agents – They are agents who represents different
types of manufacturers in a specific territory. An example would be a
person who represents all the manufacturing companies in El Salvador
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City.
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ii. Selling Agents – They mostly just handle the marketing and sales
functions for a manufacturer. Let’s say there is a person in URC, who is
the person you will approach if you want to buy products from URC to
sell in your store.
iii. Purchasing Agents – They buy goods for clients. Basically, they have a
list of retail clients. A retail client wants this particular product then the
purchasing agent will buy it to sell to the client. Think of them as
personal shoppers but for business.
iv. Commission Merchants – They take physical possession of goods and
sell them on behalf of producers. They are not part of the
manufacturing company or a selling agent. They buy from the
manufacturer and then sell them to other businesses. Think of a
wholesaler that only sells Nestle products, but they do not represent
Nestle.
3. Manufacturers Wholesalers
a. Sometimes wholesalers are owned by manufacturers. Manufacturers set up
distribution centers to make it easier for retailers to purchase and have their
goods delivered. This also save time and effort for the manufacturers to find a
wholesaler to sell their products, and they can have control over the marketing
and pricing.

DISTRIBUTOR VS WHOLESALER

You would notice in this reading that wholesaler and distributor are often used
interchangeably. This is because all distributors are wholesalers but not all wholesalers are
distributors. Here are the main differences between the two:

• A distributor is more closely tied to the manufacturer and often acts as a brand
ambassador with exclusive rights.

• A wholesaler is more independent, buying and reselling products from various

sources with less emphasis on brand promotion.

DISTRIBUTOR WHOLESALER
Relationship with Often has an exclusive May buy from multiple
Manufacturer contract; acts as a strategic manufacturers; no exclusive
partner contracts
Function Promotes, sells, and Buys in bulk and resells to
sometimes services retailers or other businesses
products for manufacturers
Product Range Usually limited to specific Offers a wide variety of
brands or product lines of products from different
the manufacturer they are maufacturers (e.g., they sell
partnered with (example if products from Nestle, P&G,
they only sell Nestle etc.)
products because they
partnered with them)
Customer Base Sells to wholesalers, Sells mainly to retailers or
retailers, or directly to large small businesses
buyers
Marketing Role Actively involved in Focuses on logistics and
marketing and brand bulk sales; minimal
promotion marketing
Territorial Rights Often assigned a specific No territorial exclusivity
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geographic area
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Inventory Ownership Yes, and may also provide Yes, but typically does not
technical support or after- offer service support
sales service

WHY WHOLESALERS?

If you think about it. Manufacturers can be their own wholesalers. But why are there
independent wholesalers? Manufacturers don’t always act as their own wholesalers
because their primary focus is on production, not distribution. Handling logistics, inventory,
and retailer relationships requires specialized infrastructure and expertise that can distract
from their core competencies like innovation and quality control. Wholesalers fill this gap by
offering economies of scale, absorbing the risks of unsold inventory, and providing market
access through established networks. They aggregate products from various manufacturers,
making it easier for retailers to source diverse goods without managing multiple supplier
relationships. Additionally, wholesalers offer financial flexibility through credit terms,
respond quickly to market demand, and provide valuable feedback to manufacturers. Their
logistical capabilities and deep-rooted connections with retailers make them indispensable
in ensuring products more efficiently from factory to shelf.

In other words, for wholesalers, their target is more businesses, and they sell in bulk.
Because they sell in bulk their pricing is lower per unit because of the discounts and because
it is cheaper to buy and sell in bulk than selling by piece. Wholesalers are also focused on
long term relationships with business partners. This is because it is common to sell to the
same customer again. Think about the wholesalers that sell to Gaisano. They could be
partners for 10 years or more. However, wholesalers don’t engage as much in marketing
because they rarely do promotions considering that they are targeting other businesses and
does not need to be known to the public except other businesses. Basically, they do minimal
marketing efforts and focus more on maintaining relations in their marketing efforts. They
are also not as concerned with location. This is because most wholesalers need a large
enough space to store their warehouses so their need to a location is low. Most wholesalers
also have their own logistics to deliver their products to retailers so retailers don’t need to go
to wholesalers to buy their products but have them delivered.

RETAILERS

• Retailing includes all the activities involved in selling goods or services directly to
final consumers for their personal, nonbusiness use.
• Retailing is the final link in the distribution chain, where products reach the end user.
• While manufacturers and wholesalers can engage in retailing, most retailing is done
by businesses whose primary revenue comes from selling to consumers.
• Example: SM department store selling clothes, cosmetics, and electronics directly to
shoppers is engaging in retailing.

TYPES OF RETAILERS

• Specialty Stores -These are stores that focus on a narrow product line with a deep
assortment. For example, a store that only sell clothing and accessories for men only
or a department store that only cater to plus size women. Specialty stores are also
used for luxury brands. Think about a store that only sell Rolex brands.
• Department Stores – These are stores that sell a wide variety of product lines, each
operated by a separate department. Think SM Department store. There is a section
for women’s clothing, men’s clothing, children’s clothing, perfumes, etc. These are
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called departments. This is why it is called department stores.

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• Supermarkets – These are large low cost, high volume and self-service stores
offering food and other household items. Grocery stores are examples of these.
• Convenience stores – Small stores located near residential areas and are usually
open long hours sometimes 24/7. They don’t carry a lot of products and is often
limited. 7-Eleven is an example of such convenience stores. Believe it or not, sari-sari
stores are examples of this.
• Discounts stores – They sell standard merchandise at a lower price by accepting
lower margins and selling higher volumes. Think Gaisano or even Uni-Top. They are
often known for cheap products and prices.
• Off-Price Retailers -These are retailers that sell merchandise bought at less than
regular wholesales prices
o Factory Outlets – These are often owned by the manufactures but they sell
their surplus or a little bit damaged goods. Like Nike outlet stores.
o Independent Off-Price Retailers – those are often independent run off price
retailers. Think about stores that sell surplus from Japan or Korea or even ukay-
ukay can fall in this category
o Warehouse Clubs- These are large companies that sell a limited number of
items that are only available to them but at a cheaper price. Because they are
clubs you pay a subscription to be a member to buy from this retailer. They are
often both a wholesaler and a retailer. S&R is an example of this type.
• Superstores – These are very large stores that offer a wide range of products and
services often in the same category. They are often known as category killer because
they have all the categories they sell. Citi Hardware is an example of this store.

NON-STORE RETAILING

It is important to note that in retailing, you don’t always need a physical store. You can also
send your own sells people to your customers home to sell your products. This is called
direct selling. You can also sell through a vending machine – a machine that dispenses a
product where a customer just insert money and get the products. We all have seen the
water dispensers around the city where you insert peso coins and get water. Another is
telemarketing where you sell the products and services to your customers through calling
them. The last is the most famous e-commerce. This is where you sell your products online
whether through your own app or website, through a social media page, or through apps like
Lazada and Shoppee.

WHY RETAILERS?

Manufacturers and wholesalers need independent retailers because these businesses

serve as vital connectors to diverse consumer markets that are often too fragmented or
localized for producers to reach efficiently on their own. While manufacturers can establish
their own retail stores, doing so requires significant investment in real estate, staffing,
marketing, and customer service infrastructure—resources that could be better focused on
product development and scaling operations. Independent retailers already have
established customer bases, community trust, and market insights that allow them to sell
products more effectively. They also offer geographic reach and flexibility, enabling
manufacturers and wholesalers to distribute goods widely without the burden of managing
multiple storefronts. By partnering with retailers, producers can expand their market
presence, reduce operational costs, and benefit from the agility and responsiveness that
independent sellers bring to the final stage of the supply chain.

Overall, retailers sell to individual consumers. And since these consumers don’t normally
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need to buy in bulk, they sell smaller quantities or by pience to their customers. Because of
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WHOLESALE AND RETAIL SELLING
this, they set their products a much higher price per unit than wholesalers. Their
relationships is short term because they don’t normally try to make their customers to buy
from them to the next 10 years or so unlike wholesalers. Because they are focused with
customers they spend a lot of money on marketing. This means they promote a lot of from
advertisements, posters, social media and focus on enhancing their brand. This means that
their marketing efforts are high on brand and promotion driven. As for location, retailers are
all about location. They need to find a way to make their products easy to access to
customers. This is why they make sure they are easy to spot and even sell in high traffic areas
like malls for example.

MARKETING CHANNELS

What you see above is called a marketing channel. A marketing channel is a set of
interdependent organizations involved in the process of making a product or service
available for use or consumption by the consumer. These channels include intermediaries
such as wholesalers, retailers, agents, and distributors who help bridge the gap between
producers and end users. Understanding marketing channels is crucial for a company
because they directly influence how efficiently and effectively products reach customers.
Kotler emphasizes that producers often lack the resources or expertise to carry out direct
marketing on a large scale, and marketing channels help reduce the workload, optimize
distribution, and improve customer service. By leveraging specialized intermediaries,
companies can focus on their core competencies while ensuring that their products are
promoted, sold, and delivered in ways that meet customer expectations and maximize
profitability. It is important to note that that longer your channel is the more expensive it is to
your end user, a.k.a. customer.
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Name: _________________________________________________________ Block: ______________________

COMPARISON MATRIX: Below is a comparison matrix between wholesaler and retailers.

You need to write what set them apart based on the categories identified. Note: The answer
is in the readings above. You will get deducted by answering outside those mentioned in the
reading materials. Please handwrite your answer. Printing your answer is not allowed.

ASPECT WHOLESALER RETAILER

Target Market

Quantity Sold

Pricing

Relationship Type

Marketing Focus

Location Importance
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